Oliver Hirschbiegel’s 2004 film, Downfall, about the last days of Hitler, attracted unsolicited notoriety on YouTube, where one particular scene was re-subtitled many times over so that the Führer might now be seen raging in his bunker about the relegation of Sheffield United or a design flaw in the latest iPod. But even the most resourceful online mischief-makers working around the clock would be hard-pressed to render Hirschbiegel’s latest biographical film any funnier than it already is. A laughing stock, however, is not the same thing as a comedy. Downfall at least showed Hitler to be a complex human being. In Diana, the same courtesy has not been extended to the late princess of Wales.

An air of fatalism can’t help but pervade any story in which the end is already known to the audience, so one of the first decisions that the makers of any biopic must take is whether or not to exploit the benefit of hindsight. Hirschbiegel and his screenwriter, Stephen Jeffreys, make clear their approach from the opening scene, in which Diana (Naomi Watts) casts a long, meaningful glance at the camera as it recedes from her. This is in Paris in August 1997 and her clairvoyance is contagious: no one in the film can stop him or herself from investing the simplest line or look with foreboding. Diana’s acupuncturist, Oonagh (Geraldine James), proclaims: “Your life is ahead of you!” Then she asks of the Parisian jaunt, “Is it right for you to be going on this trip?” There is talk of forks in the road, choices to be made, futures to look forward to. The movie has balls but only crystal ones.

When they aren’t fatalistic, the innuendoes are sexual. The portrayal of Diana’s two-year relationship with Hasnat Khan (Naveen Andrews), which makes up the bulk of the film, is only one Swanee whistle short of turning into Carry On Princess. Their acquaintance begins when Oonagh’s husband is rushed to the hospital where Hasnat is a heart surgeon. Still, one should never let a class-four haemorrhage get in the way of a love affair.

Their eyes meet across an empty triage room but only in the way that an express train “meets” a lorry parked in its path. At least acting students now have a handy three-second “How not to” guide in the form of the absurdly freighted look that passes between the actors. Perhaps they both simply took one sniff of the script and deduced correctly that subtlety would be wasted here.

Jeffreys seems to believe that the quickest way to make the upper classes seem normal is to show that they can use a double entendre as well as a fish knife. Here’s Hasnat to Diana in a lift: “Are you going down?” Diana to Hasnat: “At the palace, we stay open very late.” Hasnat on Diana’s cooking: “Pretty hot stuff, eh?” Diana marvelling at an Angolan landmine: “My, that’s a big one!” The shocking thing is that I made up only one of those lines.

It’s a poor show when a biopic can offer little to recommend its subject beyond her fame. As the film has it, Diana’s greatest attribute was not altruism or rebelliousness but an ability to say things that foreshadowed her death, or would later sound ironic in the light of it. I don’t think that the filmmakers set out to ridicule Diana but I can’t have been the only person in the cinema who experienced an eerie chill when she delivered the line: “You’re laughing at me!”

Watts does what she can with that coquettishly cocked head and sly smirk. The knowing look is a hard one to pull off, though, when you’ve just called yourself an “omnibus” instead of “omniscient”. The act of appearing knowing requires at least a scintilla of knowledge in the first place and the film seems determined to prove that Diana knew only how to stare at length into her hidden shallows.

The woman it portrays is interested in the world around her only in so far as it pertains to her. Whether swotting up on landmines, or leafing through a medical textbook in preparation for a date with Hasnat, it’s all the same – it’s about how she can advertise herself. The only smart thing we see her do is head for the bottom of the swimming pool when she is being addressed by Paul Burrell (Douglas Hodge, infinitely more camp than he was in full drag onstage in La Cage aux Folles). Few among us would not have done the same.

Occasional shards of truth glint among the kitsch. The moment when Diana kisses the mirror to leave a lipstick imprint for Hasnat is very telling – a glimpse through the eyes of a woman who saw adoration wherever she went and was flummoxed if it failed to flow back to her.

There is also the faintest suggestion that Diana’s collusion with the paparazzi made her death a kind of assisted suicide. Yet the movie has about as much self-awareness as its subject. You would have to be far surer of your material than Hirschbiegel is to include Diana’s statement that “This is wall-to-wall 22-carat bollocks!” and not worry that you’ve smuggled a review of your film into the script.

Ryan Gilbey is the New Statesman's film critic. He is also the author of It Don't Worry Me (Faber), about 1970s US cinema, and a study of Groundhog Day in the "Modern Classics" series (BFI Publishing). He was named reviewer of the year in the 2007 Press Gazette awards.

Leader: The unresolved Eurozone crisis

The eurozone crisis was never resolved. It was merely conveniently forgotten. The vote for Brexit, the terrible war in Syria and Donald Trump’s election as US president all distracted from the single currency’s woes. Yet its contradictions endure, a permanent threat to continental European stability and the future cohesion of the European Union.

The resignation of the Italian prime minister Matteo Renzi, following defeat in a constitutional referendum on 4 December, was the moment at which some believed that Europe would be overwhelmed. Among the champions of the No campaign were the anti-euro Five Star Movement (which has led in some recent opinion polls) and the separatist Lega Nord. Opponents of the EU, such as Nigel Farage, hailed the result as a rejection of the single currency.

An Italian exit, if not unthinkable, is far from inevitable, however. The No campaign comprised not only Eurosceptics but pro-Europeans such as the former prime minister Mario Monti and members of Mr Renzi’s liberal-centrist Democratic Party. Few voters treated the referendum as a judgement on the monetary union.

To achieve withdrawal from the euro, the populist Five Star Movement would need first to form a government (no easy task under Italy’s complex multiparty system), then amend the constitution to allow a public vote on Italy’s membership of the currency. Opinion polls continue to show a majority opposed to the return of the lira.

But Europe faces far more immediate dangers. Italy’s fragile banking system has been imperilled by the referendum result and the accompanying fall in investor confidence. In the absence of state aid, the Banca Monte dei Paschi di Siena, the world’s oldest bank, could soon face ruin. Italy’s national debt stands at 132 per cent of GDP, severely limiting its firepower, and its financial sector has amassed $360bn of bad loans. The risk is of a new financial crisis that spreads across the eurozone.

EU leaders’ record to date does not encourage optimism. Seven years after the Greek crisis began, the German government is continuing to advocate the failed path of austerity. On 4 December, Germany’s finance minister, Wolfgang Schäuble, declared that Greece must choose between unpopular “structural reforms” (a euphemism for austerity) or withdrawal from the euro. He insisted that debt relief “would not help” the immiserated country.

Yet the argument that austerity is unsustainable is now heard far beyond the Syriza government. The International Monetary Fund is among those that have demanded “unconditional” debt relief. Under the current bailout terms, Greece’s interest payments on its debt (roughly €330bn) will continually rise, consuming 60 per cent of its budget by 2060. The IMF has rightly proposed an extended repayment period and a fixed interest rate of 1.5 per cent. Faced with German intransigence, it is refusing to provide further funding.

Ever since the European Central Bank president, Mario Draghi, declared in 2012 that he was prepared to do “whatever it takes” to preserve the single currency, EU member states have relied on monetary policy to contain the crisis. This complacent approach could unravel. From the euro’s inception, economists have warned of the dangers of a monetary union that is unmatched by fiscal and political union. The UK, partly for these reasons, wisely rejected membership, but other states have been condemned to stagnation. As Felix Martin writes on page 15, “Italy today is worse off than it was not just in 2007, but in 1997. National output per head has stagnated for 20 years – an astonishing . . . statistic.”

Germany’s refusal to support demand (having benefited from a fixed exchange rate) undermined the principles of European solidarity and shared prosperity. German unemployment has fallen to 4.1 per cent, the lowest level since 1981, but joblessness is at 23.4 per cent in Greece, 19 per cent in Spain and 11.6 per cent in Italy. The youngest have suffered most. Youth unemployment is 46.5 per cent in Greece, 42.6 per cent in Spain and 36.4 per cent in Italy. No social model should tolerate such waste.

“If the euro fails, then Europe fails,” the German chancellor, Angela Merkel, has often asserted. Yet it does not follow that Europe will succeed if the euro survives. The continent that once aspired to be a rival superpower to the US is now a byword for decline, and ethnic nationalism and right-wing populism are thriving. In these circumstances, the surprise has been not voters’ intemperance, but their patience.